8 ways for businesses to do discounts right

Ever since the Great Recession that began in 2008, discounting has become a way of life for businesses of all types and sizes.

Initially, it was a way of trying to sell something — anything — just to get by. But consumers have grown accustomed to discounting and now demand it on a regular basis — regardless of economic conditions.

The notion of offering discounts shouldn’t be frightening to business owners. Done right, discounts can attract new long term customers, help keep the ones you have and contribute to long-term profitability.

Millions of small businesses offer discounts of one type or another — from regular sales to special offers. But many end of shooting themselves in the foot with poorly designed discounts that are offered with no particular plan.

When competitors offer discounts, the knee-jerk reaction is sometimes to cut prices willy-nilly. But offering discounts without a strategy can be harmful. It’s best to start with a plan and stick to it. For one thing, you need to monitor and measure the results of a discount strategy. If you sell more but still lose money, it’s not helping your business.

Here are eight ways to make discounting work for your business:

Balance strong discounts against your bottom line: Structure discounts that can get customers in the door, but still make money for your business. Look at your product mix and margins. That’s where business owners get burned. Evaluate carefully what you can reasonably offer, and don’t be afraid to exclude specific items that don’t fit your model.

Make the offer relevant: Devise a discount that not only will appeal to your clientele, but also one that jibes with how those customers buy from your biz. For example, a “buy one get one free” offer may appear strong on the surface. But if your customer wouldn’t typically buy multiples at the same time, it’s not likely to work well.

Commit to your campaign: Whether you use postcards, coupon packs, email or online ads, frequency and consistency are important. Prospects may see an offer but not respond right away. Some ready-to-buy consumers look for an appealing offer and may respond immediately. But with high-commitment items, they are likely to take more time to consider the offer and wait until they need to make the purchase.

Balance results with objectives: Was your goal to generate new customers? Drive more phone calls or website visits? Promote a new product or service? Don’t just file away coupons you used to promote your discount or offer. Take a little time to analyze the transactions. Did customers merely buy the discounted items or did they spend more while they were at your store or website? Well-planned discounting typically prompts customers to spend more.

Be prepared: Some businesses that offer a discount for the first time aren’t prepared for the response. If you attract customers to try your product or service, but you’re not able to serve those customers at your best level, you’re only hurting your business. Inform staff members about your discount strategy, and provide any information they need about coupons or offers. Customers may have questions, and you’ll need the answers.

Treat discount consumers the same as others: Make them feel wanted, welcomed and appreciated, even if they’re paying less. Treating people well is the key to repeat business after the discount deal is gone, and training staff to handle promotions is just as important as the offer itself.

Don’t just target new customers: Offer extra discounts for repeat business. One way to turn new customers into repeat customers is to establish loyal customer discounts of some type. Loyalty cards (buy nine, get the 10th one free), birthday discounts and referral rewards are several examples.

Don’t get yourself in hot water: Be careful with the wording of your discount and on-sale offers. Clearly label what’s “on sale” and what isn’t. If you advertise discounts of, say, “Up to 50 percent off” the Better Business Bureau suggests that at least 10 percent of the items be offered at the maximum amount off.

Reach Daniel Kehrer at bizbest.com. Follow him at twitter.com/140Main.

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